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Rising Data Center Demand Pushes Up Server DRAM Revenue

The supply of server DRAM has not kept up with demand, even though suppliers have assigned more capacity to their server product lines. Large data center projects in North America have contributed to the strong demand, researcher said.

Any sector of a market that increases revenue by double digits in a single quarter is a sector that’s probably pretty healthy.

This indeed was the case for the server-based DRAM (dynamic random-access memory) market, which reported Feb. 21 that revenue of the top three suppliers (Samsung, SK Hynix, and Micron) rose by 14 percent year-over-year in Q4 2017. The sharp increase was likely due to a continuous rise in the average selling price, reported DRAMeXchange, a division of TrendForce.

The supply of server DRAM has not kept up with the demand, even though suppliers have assigned more capacity to their server product lines. In addition, large data center projects in North America have been contributing to the strong demand growth, TrendForce said.

Further reading

DRAMeXchange analyst Mark Liu said in a media advisory that tight supply will persist in the server DRAM market during Q1 2018 because server shipments continue to show sales strength. Sales of server DRAM modules are also expected to remain high, the researcher said.

Here are Q4 2017 details from the three market leaders, according to TrendForce:

No. 1 Samsung: Samsung’s server DRAM business had a stellar performance in Q417 due to the demand generated by data center projects and the growing demand for high-density modules. Compared with Q317, Samsung’s server DRAM bit shipments went up by 8 percent. The supplier also saw higher ASP.

Revenue-wise, Samsung posted a 14.5 percent quarter-over-quarter increase for Q417 to $2.919 billion, and its market share was 46.2 percent. Currently, Samsung has been adjusting shipment fulfillment rates of orders from OEMs and ODMs. This maneuver can help satisfy the demand of major clients while increasing the profit, TrendForce said.

No. 2 SK Hynix: SK Hynix has allocated more resources to the production of server DRAM as to capture more opportunities in North America’s data center market, and the share of server DRAM in its product mix has grown by more than 30 percent in Q417. At the same time, the transition to the new server processor platform drives the sales of SK Hynix’s high-density modules and resulted in a sizable 10.9 percent quarter-over-quarter increase in revenue, totaling $1.988 billion in Q417.

The supplier’s operating margin also improved substantially compared with 3Q17. Because the demand for server DRAM is still at a high level entering 2018, SK Hynix is expected to raise the output share of its server DRAM products on a quarterly basis. SK Hynix this year will also focus on transition to the 18nm process and on increasing the penetration rate of 18nm products.

No. 3: Micron: Micron has benefited from rising prices as well as cost savings from the shrinking of processing nodes. It also saw notable increases in both ASP and bit shipments for server DRAM between Q317 and Q417. The supplier’s Q417 server DRAM revenue advanced by 17.2 percent quarter-over-quarter to $1.414 billion, amounting to a market share of 22.4 percent.

On the other hand, Micron has kept the share of server products in its total DRAM output at the near 30 percent level. The supplier’s profitability in this application market will therefore depend on continuing rise of the ASP.

TrendForce’s DRAMeXchange focuses its research on memory, storage and the consumer electronics industry in segments that include PC DRAM, Mobile DRAM, Server DRAM, NAND Flash, SSD and smartphones.